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Spotify Nomor Satu di Dunia, Tapi Kok Rugi Terus? #TIAExplainer

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Not long ago Spotify managed to make a new record namely passing Apple Music in terms of the number of paid users worldwide As of April 2019 there are more than 100 million users subscribing to Spotify Premium Twice more than Apple Music paid customers

Spotify is now one of the world's largest music streaming services, but unfortunately there is one thing that gets stuck Spotify is still losing money, guys! Even though the number of users continues to grow, Spotify is still losing money in the first quarter of 2019 of Rp 23 trillion Actually this improved slightly from losses in the first quarter of 2018, which amounted to Rp2

8 trillion But, loss is still a loss Why did it happen? Let's just say the music that Spotify broadcasts on its platform is donuts To sell donuts, they have to buy flour and sugar first as the main ingredient In the case of Spotify, flour and sugar are controlled by a handful of suppliers, the record labels The business model that Spotify runs making them have a high dependence on record labels that provide content

The problem, record labels have exclusive rights to the collection of music produced by musicians under its auspices They will ask for royalties on external parties who sell or distribute their respective music collections As the number of premium customers increases, the income earned also increases But what needs to be underlined is, as the number of users increases, fees that must be paid to the record label also increase Spotify's financial report shows, The portion of royalties (and other principal costs) that must be paid quarterly reaching 75 percent of total income

With the remaining gross profit which is only one quarter of revenue, they still have to pay for operational costs, capital costs and taxes Besides the number is greater than the company's gross profit, the nominal is increasing as the number of users increases With margins that are too thin and costs that continue to swell, no wonder Spotify has yet to make a profit Gene Munster, investors in Loup Ventures from the United States, even argue that basically Spotify's business model has been bad from the start because they continue to lose even though they are ranked number one So, will you continue to lose? At least what Spotify can do is to have your own flour and sugar to sell donuts

Spotify and other music streaming applications actually has the capacity to act like a record label Netflix, for example Before you start producing your own content, the movie streaming service was originally concepted like a movie rental shop and series By creating and broadcasting homemade content, Netflix does not need to pay royalty fees as he does when broadcasting third party content Apple Music has done a similar concept on a small scale when establishing an agreement with Chance the Rapper

They paid Chance the Rapper around Rp 72 billion for exclusive music programs on the platform for two weeks Spotify can actually take similar steps But Spotify CEO Daniel Ek once issued a statement if he had never seen Spotify as a record label

Spotify can also learn from Tencent Music Tencent Music managed to make a profit because it develops alternative revenue channels next to the subscription fee for music streaming services Tencent Music also developed a virtual karaoke application called WeSing Similar to TikTok, WeSing users can record and broadcast himself singing with a collection of songs owned by Tencent Music The other users who watched the recording can buy virtual gifts and send them to streamers singing on WeSing

A small portion of income from selling virtual prizes is given to streamers, and the rest becomes Tencent Music's income This scheme succeeded in increasing Tencent Music's revenue from around Rp 45 trillion in 2016 to around IDR 162 trillion in 2017

In conclusion, Spotify can't help but innovate, like Apple Music or Tencent Music, in order to reap profits in the future Spotify has actually begun to take the initiative They have started to issue exclusive podcast content after acquiring Gimlet Media and Anchor in February 2019 ago Spotify hopes that exclusive podcast content on its platform will generate profits in 2019 So, we just wait for more initiative than Spotify will do to make a profit

Source: Youtube

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